What is the difference between the compound interest on Rs.5,750 for one year at 16% per annum compounded yearly and compounded half-yearly?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Rs.36.80
Sum = Rs. 5750
Rate = 16%
Yearly rate of 16% for one year = 16%
Half-yearly rate = 16/2 = 8%
Compound interest for one year = (x + y + xy/100)%
Compound interest for one year at 8% = (8 + 8 + 64/100)% = 16.64%
Difference of yearly and half yearly interest rate = 16.64% - 16% = 0.64%
0.64% of 5750 = 0.64(5750)/100 = 36.80